Uganda Coffee Exporters Tipped On How To Penetrate China Market

Ambassador Fred Mugisha (3rd right) and David Katungi (2nd left), the Director of Strategy and Business Development at UCDA in a photo moment with exporters

Uganda coffee exporters have met with Uganda’s Deputy Head of Mission to Beijing, China, Amb. Fred Mugisha, to strategize on how to penetrate the China market.

The meeting held on 13^th April 2022 in Kampala, was a follow up of the first ever Uganda Coffee Day simultaneously held on March 17, 2022 in Uganda and China and was convened to discuss the coffee opportunities in China and the issues raised by coffee stakeholders in Guangzhou.

“We have been marketing and promoting Uganda coffee in China and of late, we have come across very serious[Chinese] companies that want to do joint ventures with Ugandan companies to get our coffee in the Chinese market,” Mugisha said.

China is the second biggest economy in the world with a huge middle class. Traditionally, Chinese were tea people but they are now shifting to coffee and according to Amb. Mugisha this provides Uganda a big opportunity.

The Ambassador pledged the embassy’s support to exporters who are ready to do business in China. He noted that online marketing is the way to go and encouraged them to take advantage of the available online channels to market Ugandan coffee.

David Katungi, Director of Strategy and Business Development at Uganda Coffee Development Authority (UCDA), called on the exporters to embrace the opportunities in emerging markets such as China to sell their coffee. He reiterated Government’s pledge to support exporters and emphasized that Government has invested in interventions to increase production which will boost export.

“We have interventions geared towards increasing coffee production and productivity. In 2017, we launched the coffee roadmap whose target is to produce 20 million bags by 2025 and we are moving steadily towards that target and with the interventions that we have put in place such as providing seedlings to farmers, extension services and guiding farmers on good agricultural practices, we should be able to produce what is able to satisfy the market,” Katungi said. He encouraged stakeholders to continue investing in coffee before continuing to recount UCDA’s strategic interventions in China and other emerging markets.

“UCDA is working with Uganda’s foreign missions to promote coffee,” Katungi said. “Specifically, we have developed a coffee promotion strategy for China (which we will share with you at an opportune time). We are also in the process of developing an online marketing platform to explore the opportunity of promoting, and selling Uganda coffee online.”

The Acting Director Quality and Regulatory Services, Doreen Rweihangwe, notified the exporters that UCDA has profiled Uganda coffees according to agro ecological zones in partnership with Coffee Quality Institute (CQI). Exporters will be able to use the coffee profiles to market their coffee which is important for buyers who want to trace the coffee origin.

During the meeting attended by small and medium companies, exporters raised concerns such as the need for a warehouse in China, branding, marketing and promotion and trade financing among others.

“A warehouse is a necessity for us and the sooner we get it, the better for our entry into the Chinese market,” Joseph Nkandu, the Executive Director at National Union of Coffee Agribusinesses and Farm Enterprises (NUCAFE), said. Nkandu also noted that there is need for the government to de-risk the market. He also stressed that there should be a deliberate effort to send young Ugandans to China to learn the language to prepare companies to do business in China.

Nkandu added that “finance is going to be an important factor” if Uganda coffee exporters are going to penetrate the Chinese market.

Aggrey Tumuhairwe, a partner in Kangumamu Agro processing and Exporters, a player already exploiting the Chinese market said that for Ugandan exporters to benefit from the China market, they will require an office there and will need to partner with Chinese companies. He said it is very difficult to break into the Chinese market without joint ventures. Tumuhairwe also noted that the quality of coffee and the consistency are key. He called on Government to support exporters through a brand awareness campaign of the country that will make Uganda known in China. This can then be supplemented with a coffee promotion campaign.

In an interview on the sidelines of the meeting, Katungi noted that Uganda has the capacity to satisfy the China market.

“We have seen a trend of several people entering the coffee industry to produce on a commercial level. There is a lot of land put under coffee production,” he said. “We see coffee production going up and investments going into it. So, we are confident that we have sufficient volumes to meet the huge market in China and other emerging markets.”

Katungi urged the exporters to build their capacity to provide quality coffee which will guarantee the market. The exporters, he emphasized, need to do due diligence to understand the needs of the coffee buyers in order to mobilize the kind of coffee required. In addition, they need to work together as no single exporter would be able to satisfy the market.

“Exporters would benefit more from this market if they came together and raised sufficient capital or meet the requirements because the volumes are high,” Katungi said. “Exporters should understand the dynamics of the China coffee market. One of those dynamics is that for one to supply and sustain supply they will need to partner with a local Chinese firm.”

Importantly, Katungi said that whereas China is a very unique market because of their culture, the general marketing principles apply. The exporters must ensure they meet the market quality requirements, they must be consistent with supply, they must be trusted and operate on pure acceptable business principles, he guided.

Coffee exports to China have been increasing over the years. For instance, Uganda exported 33,000 bags of coffee to China in 2018, 66,000 bags in 2019 and 83, 000 bags in 2020.